A Thai Limited Company is the most common type of all Thai companies. No matter if you want to run a restaurant, a bar, a hotel, a coffee shop, a beauty salon, an online business, a spa, a motorbike rental service or most other types of business – you will need to set up a Thai Limited Company.
Ownership Requirements for a Thai Limited Company
There have to be at least 3 shareholders owning a Thai Limited Company and at least 51% of the shares must be owned by a Thai legal entity (natural person or company). There are three exceptions to this law:
- Companies set up by foreigners holding US citizenship using the Amity Treaty
- Companies set up under the support of the Board of Investment (BOI)
- Companies that only export products or services
A Sole Proprietorship company type is only for Thai citizens as it doesn’t allow to issue work permits to foreigners.
The 8 Steps of Setting Up a Thai Limited Company
1. Reservation of the Company Name
There are two basic requirements regarding the company name. First, the suggested company name cannot be similar to another company that has already been registered in Thailand and second, certain company names are not allowed. There have to be three different company names submitted to the Department of Business Development (DBD), ordered by priority.
2. Filing a Memorandum of Association
Once the company name is approved, all shareholders must sign a Memorandum of Association (MOA) providing the names and personal details of every shareholder, the company’s address, the registered capital and the intended scope of business activities during the first year. The MOA and the relevant registration documents have to be submitted to the Ministry of Commerce.
A company seal is required (1,000 Baht) and other fees include 50 Baht for every 100,000 Baht of registered capital (minimum 500 Baht, maximum 25,000 Baht) for the Memorandum of Registration, 3,000 Baht for the Share Certificate Issuance and 1,500 Baht for the Company Shareholder Registration Book.
3. Registering the Company
When all the shares have been reserved by the Ministry of Commerce, the next step is to hold a statutory meeting with all shareholders. Then the Ministry of Commerce will issue the company affidavit, company certificate, list of shareholders and the company articles of association. The company can now start operations.
4. Registering Tax ID and VAT
Within 60 days after start of operations the company has to submit an application for a Tax ID Card as well as to register the company into the VAT System and to receive a VAT certificate.
The minimum requirement regarding accounting is the monthly withholding tax and social fund submission as well as the half year report and the annual audit including yearly profit-and-loss statement and the balance sheet.
5. Operational Licensing
There are certain licenses that have to be obtained for specific business objectives. These include: Food License, Alcohol License, Cigarette License, Entertainment License, E-Commerce License, Import License, Factory License, Internet Cafe License and Import-Export Card.
6. Social Fund Registration
Before you can apply for work permits for any foreigners working for the company (including yourself) you need to hire four Thai employees per one work permit being applied for and by doing so you need to register these Thai employees into the Social Fund System and pay at least a three month fee for them into it. The amount of these contributions depends on their salary – employer and employee have to pay 5% each of the employee’s salary into the Social Fund every month. More information about the minimum salary for Thai nationals you can find here.
7. Obtaining Work Permits
A Thai limited company must have 2 million Baht of registered capital and four Thai employees for each work permit being issued to a foreigner. For more information on how to apply for a work permit, have a look at this post. Before you can apply for a work permit, you must hold a Non Immigrant Business Visa.
8. Opening a Company Bank Account
The last step in a Thai Limited Company set up procedure is to open a company bank account, for which the bank requires minutes of the meeting of the board of directors to open the account.
And that’s it, I hope this helps setting up your company in Thailand!